State-Owned Gold Mine: What Happens When Governments Sell Data?

A European microstate called Andorra is trying to turn government-backed data collection into a new high-tech industry. In the U.S., this could become very big business—if it doesn’t irrevocably trample our civil liberties in the process and turn us into a police state.

All startup founders who's ever met an investor know they need to include a "data play" in their pitch deck. That’s your core asset—and more often than not, its potential worth is greater than the rest of your IP combined. But tech companies aren't the only entities who collect vast amounts of data about their users in exchange for providing goods and services. As we now know all too well, governments record lots of information about their country's inhabitants, which they mostly use for levying taxes and, well, spying.

But that's about to change.

Soon governments will see data the way startups do: as gold mines. Most won't sell it outright, of course, but they'll understand that the information their citizens generate through their digital activity is more than a security state's dream: It's the foundation of a brand-new and lucrative big-data industry. At least, that’s the way the government of Andorra, a tiny European state, is already thinking. Officials there are working on packing up the data the country collects into an open API that anyone can access. Brace yourself, because what they learn about building a new industry on top of data—and the privacy laws that will protect their citizens’ civil liberties—will likely be coming to a country near you sooner than you think.

You'll be forgiven if you haven't heard of Andorra until now. In the United States, it's perhaps best known for being the subject of a particularly hilarious Onion video about misplaced foreign aid, and the country's officials openly joke that their country is "not a moon from Star Wars," referencing the similarity of both its name and its lush forests to those of Endor from Return of the Jedi. But Andorra is far from fictional, and it hardly needs foreign assistance. Nestled in the Pyrenees mountains between Barcelona, Spain and Tolouse, France, the country of about 70,000 has a 2.9% unemployment rate, the 35th-best GDP per capita in the world and the seventh-longest life expectancy.

Despite the rosy statistics, the country has a problem that has forced it to be creative about the economy: 60% of the country's GDP comes from its tourism industry, which contracted by 20% under the weight of the European financial crisis in 2010. In response to the crisis, the people of Andorra brought to power a brand-new political party in 2011 that promised to increase ties with the European Union and diversify the economy.

"We cannot create something new without taking into consideration the assets we have," says Josep Maria Missé, Andorra's Secretary of State for Economic Diversification. Like many of the new government's officials, Missé is not a career politician, but comes from a background in consulting at Andorra Telecom—the nation's only Internet service provider—and large firms in Spain and France. It was this experience in the private world that led him to think of the nation's reliance on tourism as an opportunity to attract companies to the country rather than a liability. "We saw that this was an amazing framework for tech companies to come here and experiment with this tourism."

Missé also realized that the country's small technology community—mainly centered around Andorra Telecom—wouldn't be diverse enough to develop an API on its own. So he brought in MIT Media Lab researcher (and a friend and one-time roommate of mine) Travis Rich to be the director of technology of the Smart Country program.

"Andorra has a unique opportunity to become the first fully connected, fully integrated 'Smart Country,' " says Rich. The country is starting by building a mobile app for tourists that will suggest shopping destinations and collect data about visitors' buying preferences. But the eventual idea is to provide access to the data the app generates via an open API that anyone around the world can access and contribute to.

Exposing mobile app data via the API is just the beginning. "It's not prohibitively ridiculous to install sensors in every store or restaurant around the country," says Rich. He wants to create a countrywide network of sensors to collect data on noise, air, and water quality that can be easily expanded by researchers and companies.

"The goal is to develop a platform that is sourced with data from the telecom, energy provider, installed sensor infrastructures, the bus company, tourist buying habits, store directories, store inventories, restaurants, etc., and to make it available to researchers, entrepreneurs, and companies as a tool for understanding and experimenting with new technologies and ideas."

Of course, lots of governments around the world are gradually opening up APIs to the public, including the United States. Andorra's plan is different because it will include anonymized data on individuals. It's as if the NSA gave everyone access to their database of telephony metadata. If that makes you feel uncomfortable, you're not alone.

Even before the NSA spying scandals rocked the U.S., both Rich and Missé were sensitive to the privacy issues that come with creating a countrywide API. Now, Rich has started to think of his project as not just a test of the countrywide API concept, but a chance to experiment with the best practices and policies to govern it as well. One way Andorra is addressing these concerns is by stressing that all data will be aggregated and anonymized, and by making sure the government isn’t directly involved in collecting or processing data.

"We are not going to sell private information," Missé explains. "That is something we are going to say from the beginning and we are going to do this from a separate company of the government. We are not going to be the government doing this directly."

Of course, in the wake of the NSA revelations, where private companies willingly gave the U.S. government information on their subscribers, this separation might not be too reassuring. That’s why Rich is investigating ways to truly anonymize the data that flows through the API before it ever reaches an Andorra Telecom server in a way that would make it useless to anyone trying to glean personal information from it, including the Andorran government. Rich is also hoping to convince Missé to make the API completely open to the world so that anyone can verify that the data is anonymous, and he has already launched a website where anyone can send feedback on his ideas.

"I think that you can have the sort of platform where there is trust in the data and there is trust in the anonymity of the data, because it is verified and it is open for everyone to look at," says Rich. If the effort succeeds, it could lay the groundwork for how democratic governments can collect useful data about their citizens without trampling on civil liberties.

So when can you expect to access your own country's API? Of course, there are some things Andorra can do thanks to its small size that simply won't scale to larger places. "The nice thing about a small country is that you can find all the resources you need to deploy the smart city concept in just maybe one or two calls," explains Jordi Ascensi Scala, the first chief innovation and services officer of Andorra Telecom. "If I need to start a project on e-health, I will call the director of the hospital and then I will call the minister of health care, and it will be easy."

Obviously, that kind of coordination is just not possible in a country as large as America. But if Andorra's experiment succeeds at attracting foreign investment and protecting its citizens’ and visitor's rights, the idea that a country's data could become a new industry might be too tempting for governments to resist. That might not be such a bad thing.

The most shocking aspect of the NSA scandal here in the U.S. was not necessarily that the government was collecting data, but that it was doing it with such secrecy across the entire program. If governments want to facilitate the building of new industries on top of the data they collect, they’ll have to be open about it. If the Smart Country project succeeds, they’ll have a framework for how to do just that in Andorra.

According to Rich, if we can trust our governments enough to collect data and expose it via an API, we may reap benefits that go well beyond the economic gains.

"I'm personally excited about what this could mean for testing beyond simple technologies. What new abilities will it give us to hack and test governments, journalism, or civic interaction? Perhaps new ways of assessing what makes people happy, healthy, and productive members of society. Technology may be the easy first step, but I have a hunch the real impact of the work will be new methods of exploring and understanding the fundamentals of society and humans."

Gabe Stein

Gabe Stein is a contributor to Co.Labs specializing in computer science history, publishing and futurology. Prior to becoming a contributor, Gabe was the resident "News Hacker" and an editor for Co.Labs. Before that, he worked at Google and OgilvyAction in New York. He would love to talk to you about the future of everything on Twitter.